Regulatory reporting checklist: avoid these 10 common errors

Navigating FATCA and CRS reporting can be a complex and intricate process prone to errors. Earlier this year, the Jersey Government published a paper on common errors found in the 2022 CRS and FATCA submissions. Delving into the errors of 2022 and other common pitfalls, this article provides guidance and explains how software can play a crucial role in avoiding these costly mistakes.

1. Registering for a GIIN after mid-May

Financial institutions should not wait to register for a Global Intermediary Identification Number (GIIN) until June, as the GIIN list will not be updated in time by the Internal Revenue Service (IRS) for the reporting deadline. Register for a GIIN before mid-May to ensure the IRS can update its GIIN list on time for the reporting deadline, and that the correct GIIN is used in the report.

More information

You can register for a GIIN here More information on GIIN formatting can be found here

2. Solely depending on FATCA GIINs to back up self-certifications

It’s crucial for financial institutions to do thorough checks when new accounts are opened. Solely relying on FATCA GIINs to confirm if an entity is a financial institution is not sufficient. Implement robust due diligence procedures for the opening of new accounts, like obtaining comprehensive documentation and conducting thorough background checks on customers to verify their tax residency status. Provide staff training to make sure they can confidently spot errors and gaps upon opening new accounts. Another solution is to equip software that can automatically flag inconsistencies and errors to mitigate the risks of inaccurate reporting.

3. Accounts containing dummy TINs

Financial institutions must provide an accurate Date of Birth (DoB) and Tax Identification Number (TIN) to avoid validation issues for returning submissions. Upon opening a new account, RFIs need to obtain a TIN as part of the self-certification process. In situations where the TIN is not currently on file for preexisting accounts, RFIs must make reasonable efforts to obtain it. Suppose there is a change in circumstances that the RFI becomes aware of, they should obtain a self-certification and new documentary evidence to determine the residence jurisdiction(s) within 90 calendar days. Outreach efforts need to be demonstrated annually at minimum to avoid compliance risks.

ReportGenie’s TIN validation detects potentially inaccurate country-specific TINs and provides you with warnings and guidance prior to final submission. By incorporating this tool into your client screening and onboarding process, you can not only minimise the need for corrections, but also improve your data quality from the start.

4. Misspelling and wrong character formatting

Names reported by financial institutions must match with the GIIN list. Ensure exact spelling to avoid validation issues. Pay close attention to special characters, formatting requirements and be mindful of space and case sensitivity. A quick once-over can save you from the headache of dealing with validation errors later. ReportGenie can assist during this process by flagging inconsistencies and by providing warnings.

5. Submitting corrections too late

Another common pitfall is waiting until the portal re-opens in October to submit any corrections to your submissions, which can lead to compliance penalties. Address these errors as soon as they are identified, so you can mitigate risks and avoid penalties and unnecessary stress. ReportGenie’s platform allows easy, code-free corrections, so you have full control over the corrections process.

6. Not reflecting accurate account status

Financial institutions must mark relevant accounts as closed. Not accurately doing this raises questions during audits and impacts the accuracy of reported data. When an account is closed, the reported information should include the fact of closure of the account and the gross payments made to the account holder during the relevant reporting period. Additionally, in cases where an RFI is being dissolved or liquidated, special attention must be paid to reporting requirements for accounts closed due to liquidation or winding up.

7. Not updating account changes

Another common error arises when financial institutions change their names but fail to update the FATCA IRS GIIN account and the AEOI portal accordingly. This leads to the rejection of return submissions. The GIIN account and AEOI portal must be updated with name changes of the FI. Financial Institutions must ensure they register for a GIIN before mid-May, so the GIIN list can be updated on time by the IRS.

8. Failing to monitor changes in regulations

Financial institutions must be vigilant to stay compliant with changes in regulations. Failing to monitor these changes properly leaves financial institutions vulnerable to compliance gaps and oversights. Regularly monitor industry updates and stay alert for developments affecting your organisation. ReportGenie’s experienced team monitors and implements industry changes to consistently stay updated with changing requirements.

9. Incorrect interpretation of changes

Besides monitoring developments in the industry, it is also crucial for financial institutions to interpret developments correctly and apply them across the organisation to avoid the risk of non-compliance. ReportGenie’s FATCA and CRS software ensures compliance with evolving reporting standards. The jurisdiction-specific XML output is regularly updated to align with current regulations.

10. Conflicting data across the systems being used by the FI

Using different data sources across departments and teams leads to data discrepancies and can cause errors in the reporting process. Address conflicting data at the source by standardising processes and implementing ongoing monitoring procedures.

Address common errors effectively using ReportGenie

ReportGenie’s FATCA and CRS software helps you stay on top of changes in the regulatory reporting landscape and provides you with features dedicated to saving valuable time during the reporting process. Learn more about ReportGenie and request a free demo.